Turkish lira weakens after Fed reaffirms tightening policy
ANKARA, Nov 9 (Reuters) - Turkey's lira weakened around onepercent against the dollar to its weakest level of the week onFriday after the U.S. Federal Reserve reaffirmed its stand ontightening monetary policy, causing markets to price in a U.S.December rate hike.
The lira has recovered strongly from a plunge toa record low of 7.24 to the dollar in August, triggering heftyinterest rate hikes. However, it remains down nearly 30 percentagainst the U.S. currency this year.
Its steep decline knocked global financial markets and putTurkey's economic woes in sharp focus. Investors have voicedconcerns about the outlook for banks sector and the realeconomy.
On Friday, the lira stood at 5.5100 against the U.S. dollarat 1101 GMT, off an earlier low of 5.5422 but weaker thanThursday's close of 5.4622.
The lira depreciation on Friday came as emerging marketshares and currencies fell to their lowest in a week, tracking aglobal downturn in sentiment after the Fed reaffirmed its stanceon tightening monetary policy. Investor concerns about President Tayyip Erdogan's influenceover monetary policy and the central bank's ability to rein indouble digit inflation, which hit a 15-year high in October at25 percent, also contributed to the lira weakening this year.
"Inflation printed at 25.2 percent in October and may go upfurther. The economy is slowing visibly due to high (but nothigh enough) rates and a collapse in confidence," said ChristianMaggio, head of emerging market strategy at TD Securities.
"Turkey's idiosyncrasies could again trigger a sharpsell-off during the next three months, but the carry cost ofUSDTRY longs remains too high," Maggio said.
The main share index fell 1.05 percent, with sharesin Halkbank falling 2.59 percent after its thirdquarter net income fell short of expectations. Shares in oilrefiner Tupras dropped 3.8 percent.
(Reporting by Marc Jones and Ezgi Erkoyun; Writing by TuvanGumrukcu; Editing by Angus MacSwan)
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